Friday, March 4, 2011

Krugman Blasts Trichet


So what the ECB is saying, in effect, is that Europe should drive down nominal wages — which can only be done by raising the unemployment rate — in order to offset the effect of oil and food on headline inflation. (Real wages will fall in any case.)
Is this really a policy that the ECB would defend in so many words? I doubt it. But however sober and dignified talk of price stability may sound, that’s what the proposed policy amounts to.

No comments: